Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Occidental Petroleum Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 4.0% to -0.8% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 54, DPO 78, DIO 41). At a 6.5% WACC with mid-year discounting, the terminal value (71% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 7.2x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $76.95 per share, suggesting OXY is undervalued by 19.8% at the current price of $64.21.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 6,331 | 6,530 | 6,865 | 6,956 | 6,897 | 7,069 |
| (−) Net Interest | 939 | 968 | 1,018 | 1,031 | 1,023 | 1,048 |
| (+) D&A | 5,382 | 5,713 | 5,777 | 5,509 | 5,100 | 5,228 |
| EBITDA | 12,652 | 13,211 | 13,660 | 13,496 | 13,019 | 13,345 |
| (−) Tax | 1,506 | 1,553 | 1,633 | 1,654 | 1,640 | — |
| (−) CapEx | 4,526 | 4,668 | 4,908 | 4,972 | 4,930 | — |
| (−) ΔWC | 15 | 59 | 99 | 27 | -17 | — |
| Free Cash Flow (FCF) | 6,605 | 6,932 | 7,021 | 6,843 | 6,467 | — |
| Peers' EBITDA Multiple | 7.2x | |||||
| Terminal Value | 95,816 | |||||
| WACC / Discount Rate | 6.53% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 6,400 | 6,304 | 5,994 | 5,484 | 4,865 | 69,836 |
| Enterprise Value | 98,883 | |||||
| Projection Period | 29,047 | 29.4% | ||||
| Terminal Value | 69,836 | 70.6% | ||||
| (−) Current Net Debt | 21,968 | |||||
| Equity Value | 76,915 | |||||
| (÷) Outstanding Shares | 1000M | |||||
| Fair Price | $77 | +19.8% | ||||
| WACC \ EV/EBITDA Exit Multiple | 3.2x | 5.2x | 7.2x | 9.2x | 11.2x |
|---|---|---|---|---|---|
| 4.5% | $42 | $64 | $85 | $107 | $128 |
| 5.5% | $40 | $61 | $81 | $101 | $122 |
| 6.5% | $38 | $57 | $77 | $96 | $116 |
| 7.5% | $36 | $55 | $73 | $92 | $110 |
| 8.5% | $34 | $52 | $69 | $87 | $105 |
Current price: $64.21. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.